Longtime viewers of my television program know that I've been banging the recession drum for a while now, but the truth is that an economy as large and complex as ours doesn't just collapse overnight. It happens slowly and methodically, with plenty of warning signs along the way.
Think about it as a series of waves heading toward the beach, with each one representing a different area of trouble. There's one for slowing consumer spending (American Express said that spending among its affluent clients slowed for the first time since 2001); one for inflation (wholesale and consumer prices recently posted their largest increases in 26 and 17 years, respectively); and one for the continuing credit crunch (Citigroup recently announced its fourth-quarter loss was the largest in its 196-year history).
But while those waves are the latest to form, we need to pay more attention to the wave that started it all: housing. In theory, looking closely at the housing market in some parts of the country could help predict what's in store for the rest of us. And if that's true, then buckle up.
GLENN: Going to take a quick break here and I also want to tell you that there is a -- and Stu, help me out on this. I can't believe that CNN.com actually printed my editorial on the economy.
STU: I don't see why not.
GLENN: It's on the front page of CNN.com.
STU: As you know, Glenn, you work for a division of CNN which honors the fact that you have opinions that some people think are crazy.
STU: I mean, that is part of the business we do.
GLENN: Yes, my point exactly. So here's the editorial. Glenn Beck, warning signs missed on the economy. Glenn Beck says USA economy has slowly been collapsing. He says some people are trashing their houses before leaving them and politicians have a lot of ludicrous ideas for solving economic problems, he says. In it on CNN.com right now I trash Hillary Clinton and the Democrats who -- well, even George W. Bush who want this stimulus package. Let's just put this -- here's one of the lines when I get into Hillary Clinton: Now, I'm not a former first lady but I am a thinker. So let me ask the obvious question." I can't believe they've actually put this up on the front page of CNN.com.
STU: It's exciting.
GLENN: And they didn't change the font lines on this. The opinions expressed on this commentary or solely those of the writer. I don't think they would have led with that.
STU: I'm surprised that wasn't the title.
GLENN: I know. I'm surprised it doesn't just scroll across the page the whole time. It should be -- should be all capitals. It's like they are shouting it: The opinions expressed in this commentary are solely those of the writer!
STU: I've got to ask you a question about this article. I was reading. I think I understand what you're saying but I have a question for you about it. Do we have time for this?
DAN: We have just a minute.
STU: We have just a second. When you are saying this, you almost come out like you are -- I understand you don't like the idea of a stimulus package, it's not the best way to help the economy but I don't know that there's ever a time that I feel like, yeah, you know what, tax rebate, bad idea. I don't -- cut my taxes.
GLENN: Yeah, here's why tax rebate is a bad idea. Tax rebate is a bad idea because tax rebate is crack cocaine. It will give -- it is a $800 blip on the radar screen that goes away. Most people take that $800 and they will pay down their debt. So, yes, great. I can take $800 and I'll pay down my debt but it does nothing to stimulate the economy and it's short lived. In the article I explain. I mean, when are people going to understand income tax slashing? What we have is the second highest corporate tax rate in the world, about to be the first. We've got to slash those rates. You've got to do permanent things. And you also have to take a bitter pill. People were stupid, they got into houses they couldn't afford. Banks were stupid. They lent too much money out. They got greedy. You know what? They need to feel the pain. The homeowner that has that needs to feel the pain. You cannot keep giving aspirin and Band-Aids for these bubbles. You must lance the boil to be able to heal, and we're never going to heal if we keep playing these games with the economy. Read all about it, front page at CNN.com. It is warning signs missed by the economy by me.